Department of Workforce Development

Management: James Buchen, Alfred Peck, Earl Gustafson, Robert Oyler, Daniel Petersen

Chair: Gregory Frigo

Department Staff Present:  Bruce Hagen, Al Jaloviar, Richard Tillema, Michelle Kho, Thomas Smith, Phil Klun, Carol Laudenbach, Brian Bradley, Len Wroblewski, Sue Lowry, Brian Bradley, Teresa Wojick, Frances Healy, Tim Haering

Others present: Robert Anderson of WCCF

10:10 am: Frigo called the meeting to order, asked if there were any corrections to the minutes from the April 10, 2002 Council meeting. Peck motioned for approval, Penkalski seconded, and the minutes were approved without objection.

Hagen began his federal issues update, said Pres. Bush’s unemployment insurance/economic support package is not supported by states, because it gives US DOL more money and less responsibility while giving states less money and more responsibility. The Division is drafting a neutral letter to US DOL Sec. Chao for Gov. McCallum’s signature.

Hagen said the proposal gives the .2% FUTA tax for US DOL operations, makes states compute their own tax rate to fund UI programs, does not expect the bill to emerge from committee. He said Wisconsin would get about $1 million more than the current program. US DOL taking comments form states. Hagen asked them whether they would take .1% instead of .2%.

Hagen highlighted the recent Reed Act distribution. US DOL is asking states how they will use it. Hagen said it would stay in trust fund for future benefits and to maintain low a solvency rate, said job centers may ask for some and the Council would have to decide.

Peck asked, Frigo noted that the Council cannot distribute Reed Act funds until 2003, according to 2001 Wisconsin Act 35. Peck asked for clarity on Reed Act fund usage in other states. Hagen noted several states’ UI trust funds near insolvency. Jaloviar commented on federal document analyzing states’ fund use.

Hagen noted the state budget may contain some state agency job cuts, but since DWD is mostly federally funded, cuts would be smaller than other agencies. Hagen also noted UI workload is decreasing, Bradley noted a decline in disputed claims.

Gustafson asked for a perspective on how Michigan dug out of their 1980’s UI trust fund deficit. Hagen said the numbers on the federal document are old. Peck credited a strong economy.

Frigo introduced Wroblewski’s report on UI benefits for military reservists called to active duty. Wroblewski noted rank of E-4 would be eligible for maximum benefit rate, noted UCX is currently paying higher benefit rate on fewer claimants, Jaloviar commented.

Penkalski asked about relative benefit rate for active-duty reservists coming back to slower economy, worried about benefit cut for reservists who would be eligible for higher benefits based on their civilian jobs. Wroblewski said he would research, Hagen, Jaloviar, Gustafson commented.

Hagen asked the Council what they would like to do about a situation where returning reservist got lower benefit based on military pay than on civilian wage. Penkalski asked if any Council idea could be put into the budget adjustment bill. Frigo said a law change would be needed and discussed some options. Jaloviar discussed a high-low monetary claim process used by teachers, said it could be used for reservists.

Frigo said research would be done on addressing the situation. Platz asked if such a problem occurred during the Gulf War. Jaloviar commented. Frigo said UC program may have some special provisions [Smith eventually found that statute, but provisions did not pertain to the current situation.]

Klun began the first comprehensive annual fraud report under the new UI law, encouraged the Council to comment on what they would like to see if future annual fraud reports. Klun’s report highlighted cross-matching, including Social Security pension (which phases-out in 2003), fraud detection methods, SOL Q (Social Security Online Query), fraud education and warnings, fraud prevention tools, Internet site with phone numbers and contacts for fraud tips, dollar amounts for fraud detected and collected.

Klun’s presentation was interrupted several times to pursue greater detail in specific areas.

Jaloviar commented on .5% of claimants using identity fraud. Laudenbach said the number was insignificant. Peck asserted 1 of 200 claimants is significant. Jaloviar asked what could be done to alleviate the remaining .5%.

Jaloviar noted the real-time aspect of SOL Q. Klun noted a small percent of SOL Q queries show deliberate fraud. Klun, Hagen, Buchen, Gustafson, Peck, Laudenbach comment on identity fraud.

Peck commented on the UCB-38 form, said the process is frustrating to small employers, takes too much time to dispute wage claims, and is ineffective for claimants who aren’t really trying to get back to work.

Klun noted employers need to fill out the forms, though collected overpayments are credited to the reserve fund, not to employers’ accounts. Klun told some employer fraud anecdotes. Laudenbach, Oyler commented.

Bolton asked about catching employer fraud. Klun, Laudenbach commented on the Division’s detection methods. Gustafson asked about the statute of limitations on fraud prosecution. Klun said 3 years for misdemeanors, 6 years for felonies.

Jaloviar, Buchen, Klun, Platz comment on penalty payments for fraud and the Department procedure for collection.

Peck asked if fraud was high because the state pays too fast. Klun commented on new hire cross-match o help stop benefits before they become overpayments.

Penkalski suggested front-end fraud check by verifying SS #s when employers pay UI taxes. Laudenbach, Klun said that would be a huge workload increase. Jaloviar said the new hire cross-match would verify SS #s for about 10% of the workforce.

Buchen asked about District Attorney prosecutions for fraud. Klun commented on the prosecution his statistics chart. Peck asked about DA’s willingness to prosecute. Jaloviar said some DA’s require physical identification of fraudulent claimants (those who department staff have met in person) and will not prosecute with electronic identification (address and phone number only).

Peck asked why DA’s are designated prosecutors. Klun said the county of venue (where the fraud occurs) determines prosecutorial authority, said the state Department of Justice is used for really prosecutions involving large amounts of money or multi-jurisdictinoal fraud.

Platz asked about 3^rd-party payers of sick benefits. Klun said sick pay is not considered a wage for UI purposes, noted UI benefits could be denied on failure to meet the ‘able and available for work’ standard for eligibility.

Oyler asked about self-employment fraud. Frigo, Klun commented on standards for proof of fraud.

Lyons asked about employer underpayment/non-payment fraud. Bradley said the Department has auditors statewide who would detect that kind of fraud. Hagen commented on auditors and the inter-state new hire system.

Peck commented on various undeterred employment fraud. Klun commented on the Department’s fraud radar.

Laudenbach asked for comments, suggestions for future fraud reports. Frigo suggested something on tax fraud. Peck suggested a one-page bullet-point highlight summary. Lyons asked for more raw statistics.

Buchen asked about the trust fund balance. Bradley commented.

Jaloviar asked about TSB, TEUC expenses. Laudenbach highlighted benefit payments for TSB, TEUC and EB, noted uncertainty when the state will trigger off EB, but the threshold was near. Jaloviar noted the Off trigger is 4% unemployment and the state rate was at 4.1%.

Oyler asked about labor standards language for US DOL. Frigo noted progress.

(12:15 -- break for lunch)

1 pm: Meeting resumed. Frigo checked Council member availability for future public hearings, noted the hearings would go on even without a quorum, but the Council meetings would not. Council members discussed their schedules.

Smith commented on various letters to the Council. Buchen commented on the ‘able and available’ (A&A) issue in one of the letters. Peck asked about and Frigo explained the 15% availability rule for suitable jobs in an employment area. Peck suggested the law should be changed.

Frigo said non-charges were a possible option under certain circumstances. Buchen said many A&A situations are more like workplace injuries, said he was willing to consider non-charges under certain circumstances. Oyler said creating new non-charges may not be the solution. Petersen felt it was a workers compensation issue.

Frigo noted very few similar situations. Peck suggested looking into the number of similar cases. Peck asked about and Frigo explained the origin of the 15% A&A rule.

Frigo, Oyler, Petersen commented on injuries under worker’s compensation, noted off-duty injuries become WC cases if the injury is aggravated on the job. Peck, Frigo, Buchen, Platz discussed the consistency of WC and UI policies and possible creation of non-charges under certain circumstances.

1:18 pm: Meeting adjourned for lack of anyone to testify at the public hearing.